KRN Heat Exchanger and Refrigeration Limited

Technology — Electronic Components · NSE

₹1,144.10−₹87.10 (−7.07%)

DalalBaazaar Score

63 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by negative free cash flow, small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

The 60-second version of KRN Heat Exchanger and Refrigeration Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

KRN Heat Exchanger and Refrigeration Limited manufactures and sells heating ventilation and air conditioning (HVAC) parts and accessories in India and internationally.

IndustryElectronic Components

SectorTechnology

Employees574

Annual revenue₹600 Cr

How does it make money?

Turns over ₹600 Cr a year. Of every ₹100 of sales, about ₹13 reaches shareholders as profit, with ₹20 left at the operating level before interest, tax and depreciation. Each of its 574 employees supports ₹1.05 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.05 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 17.8% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE32.0%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 55.0% and earnings to grow about 78.2% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+55.0%

Est. earnings growth+78.2%

Analysts1

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +143% while net margin moved -2% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+143%

Margin effect-2%

DalalBaazaar Score

63/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 73.8x is demanding — it needs sustained high growth to justify
✓ P/E is 21% below its own historical median of 93.0x — cheap by its own standards
✗ P/B of 12.42x is a steep premium to book

Quality vs. Valuation

Company Quality

69/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

42/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

73.8x

2Y Median

93.0x

26 monthly readings · mean 96.1x · range 53.4x–132.9x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 21% below its 2y median of 93.0x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 346% above the peer median of 16.5x.

vs. its own history

Cheap

93.0x median over 26 months · -21%

vs. sector peers

Expensive

16.5x median of 4 peers · +346%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

64.1x

PEG

2.22

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 54.2% to 13.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 62.4% to 17.8% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 5 high

🔴Debt has risen sharplyFinancial
Total debt is up 411% over 3 years, from ₹37 Cr to ₹187 Cr.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Receivables growing faster than salesFinancial
Receivables up 352% against revenue up 143% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 395% against revenue up 143% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 21% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 352% against revenue up 143%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 346% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 54.2% to 13.3%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
5 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 26% a year✓ 34.4% CAGR
Latest reported year was 118.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 18%✓ 19.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹361 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 15%✓ 17.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 3 neutral · 3 weak

Market Cap

₹7,489 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

73.8x

Expensive

Expensive — verify against sector peers

P/B Ratio

12.42x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹15.5

Profitable

Profitable on a per-share basis

ROE

13.3%

Moderate

Moderate capital efficiency

ROCE

17.8%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.33x

Low

Conservative leverage

Revenue Growth (YoY)

118.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

160.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹361 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

28.0x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

16.9%

Good

Healthy core-business profitability

Net Margin

13.2%

Good

Strong bottom-line conversion

Current Ratio

1.64

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.79

Defensive

Steadier than the market

52W Range Position

51%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1391.1 / 1445.6

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

29.9

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹247 Cr	₹308 Cr	₹429 Cr	₹600 Cr	+34.4%
EBITDA	₹51 Cr	₹62 Cr	₹82 Cr	₹120 Cr	+32.9%
EBITDA Margin	20.6%	20.2%	19.0%	19.9%	—
PAT (Net Profit)	₹32 Cr	₹39 Cr	₹53 Cr	₹76 Cr	+33.3%
EPS	₹6.93	₹8.45	₹9.75	₹12.3	+21.1%
ROE	54.2%	30.2%	10.6%	13.3%	—
ROCE	62.4%	37.7%	15.4%	17.8%	—
Total Debt	₹37 Cr	₹87 Cr	₹33 Cr	₹187 Cr	+72.3%
Free Cash Flow	-₹9 Cr	-₹53 Cr	-₹130 Cr	-₹361 Cr	—

🟢 Revenue has grown at 34.4% a year over 3 years.

🟢 EBITDA has grown at 32.9% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 19.9% over 3 years.

🟢 PAT (Net Profit) has grown at 33.3% a year over 3 years.

🟢 EPS has grown at 21.1% a year over 3 years.

🔴 ROE has fallen from 54.2% to 13.3% over 3 years (-40.9 pts).

🔴 ROCE has fallen from 62.4% to 17.8% over 3 years (-44.5 pts).

🔴 Total Debt has grown at 72.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹932 Cr

Total Liabilities

₹358 Cr

Cash & Equivalents

₹10 Cr

Operating Cash Flow

-₹114 Cr

Capex

-₹248 Cr

Shareholding (proxy)

Institutional Holding

9.3%

Insider Holding

67.1%

Analyst Consensus

Recommendations

1 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹1,319

+15.3% vs CMP

Target Range

₹1,319 – ₹1,319

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

3 mixed3 general

KRN Share Price News: 6.26% Decline and Peer Comparison

Univest, 15 Oct

KRN Heat Exchanger Share Price Declines

Kalkine India, 15 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Mukul Agarwal adds 470% multibagger to Rs 8,000 crore portfolio, trims KRN Heat exposure

The Economic Times, 13 Oct

Compare Raymond with

Equitymaster, 15 Oct

KRN Heat Exchanger Share Price: Second Straight Decline

Univest, 16 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

KRN Heat Exchanger and Refrigeration Limited (NSE:KRN) Reported Earnings Last Week And Analysts Are Already Upgrading Their Estimates

Simply Wall Street, 19 MayAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongFinancial Health · Growth

MiddlingBusiness Quality · Profitability · Risk

WeakValuation

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 5 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑